Low interest rates, government stimulus and fresh opportunities drive Australian M&A deal volume: BDO Horizons 2021 - Issue 3

24 August 2021

Latest research from BDO Australia shows that mergers and acquisitions (M&A) deal volume for the second quarter of 2021 increased by 92 % - fuelled by low interest rates, government stimulus responses to COVID-19 and proactive opportunities for investors.

Q2 2021 deal value also increased by 116% in comparison to Q2 2020, with average deal value increasing 11% from USD $77 million to USD $86 million.

Sebastian Stevens, National Leader, Private Equity and Corporate Finance Partner at BDO in Australia said with a total of 102 transactions in the quarter, the most active sectors were Technology Media and Telecommunications (TMT) and Business Services, representing 20% and 17% respectively.

“We’ve seen strong investor appetite for growth through acquisition, with companies acquiring competitors who were mismanaged during the pandemic,” Stevens said.

“Deal-making has been heavily supported by the broader economic and political landscape, with low interest rates and unprecedented amounts of government stimulus.”

In terms of Q3 and Q4 expectations, the research indicates a healthy pipeline of 405 total deals in Australasia.

“Consumer is expected to be the most active sector with 101 deals in the pipeline, followed by TMT (63) and Business Services (52).

“These three sectors account for 53% of pipeline deals, which is consistent with the prior quarter. Real Estate activity is expected to remain on the low side with six deals in the pipeline as businesses continue to promote working from home flexibility in the ‘new normal’ following the COVID-19 pandemic.”

Click here to read the report.